, Columnist
Desperate Medicine for Indian Markets
The government is tweaking taxes to nudge the central bank toward rate cuts.
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To make amends for its inexplicably harsh monetary policy, the Reserve Bank of India pruned its benchmark interest rate by a quarter-point in early August. Two months later, the RBI has chosen to stay pat. If the previous move was a delayed placebo, the latest inaction prepares the ground for a risky experimental treatment.
That's because New Delhi is getting desperate to revive slowing growth, which, at an estimated 6.8 percent for the fiscal year, may be running 1.5 percentage points lower than the economy's potential, according to Bloomberg Intelligence economist Abhishek Gupta's estimates.